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Terms in this set (168)1) A price elasticity of demand of 2 means that a 10 percent increase in price will result in a B 2) The price elasticity of demand is a units-free measure of the responsiveness of the ________ when all other influences on buying plans remain the same. C 3) The concept used by economists to indicate the responsiveness of the quantity demanded of a good to a change in its price is the D 4) If a 10
percent rise in price leads to an 8 percent decrease in quantity demanded, the price elasticity of demand is A 5) If a large percentage drop in the price level results in a small percentage increase in the quantity demanded, A 6) The price of apples falls by 5 percent and quantity of apples demanded increases by 6 percent. We conclude that the demand for apples is C 7) The price of
oranges rises by 3 percent and quantity of oranges demanded decreases by 3 percent. We conclude that the demand for oranges is E 8) The price of plums falls by 7 percent and quantity of plums demanded increases by 6.75 percent. We conclude that the demand for plums is A 9) The price of good A falls by 10 percent and quantity of good A demanded does not change. We conclude that the demand for good A is C 10) Which one of
the following illustrates an inelastic demand? A 11) Which one of the following
illustrates an elastic demand? B 12) If a 12 percent fall in price results in an 8 percent
increase in quantity demanded, the price elasticity of demand equals C 13) The demand for good A is unit elastic if E 14) Demand is inelastic if C 15) If the demand curve for a good is a horizontal line, then the good has C 16) If a 10 percent rise in the price of goods leads to a 10 percent decrease in quantity demanded, the demand curve for this good E 17) A unit elastic demand B 18) Suppose a rise in the price of a good from $6.50 to $7.50 leads to a decrease in the quantity demanded from 10,500 to 9,500 units. In this range of demand, the price elasticity of demand is E 19)
A fall in the price of a good from $11.50 to $8.50 results in an increase in the quantity demanded from 19,200 to 20,800 units. The price elasticity of demand is A 20) A fall in the price of a good from $10.50 to $9.50 results in an increase in the quantity demanded from 18,800 to 21,200 units. The price elasticity of demand is C 21) Suppose the quantity of root beer demanded decreases from 105,000 litres per week to 95,000 litres per week when the price rises by 5 percent. The price elasticity of demand A 22) Suppose that the price elasticity of demand for bottled water in Sackville, New Brunswick is 1.5, while the price elasticity of demand for bottled water in Prince Albert, Saskatchewan is 0.93. This implies that the demand in Sackville is ________ and demand in Prince Albert is ________.
D 23) Suppose the government of Nova Scotia wants to reduce the consumption of electricity by 5 percent. The price elasticity of demand for electricity is 0.40. You advise the Nova Scotia government to A 24) Suppose the Lethbridge Computer Company decides to increase the quantity of computers it sells by 6 percent. If the price elasticity of demand is 3.5, the company must D 25) If the demand for salmon in Cape Breton Nova Scotia is unit elastic, the price elasticity of demand for salmon equals A 26) At a price of $15, Jack's quantity demanded
of good A is the same as when the price rises to $16. Jack's demand for good A is E 27) Which one of the following will yield a measured price elasticity of demand of 5.0? A 10 percent rise in price results in a D 28) Refer to Table 4.1.1. The price elasticity of demand when the price rises from $6 a unit to $7 a unit is C 29) Refer
to Table 4.1.1. Demand is unit elastic when the price falls from D 30) Refer to Table 4.1.1. If the price of good A falls from $4 to $3, E 31) For which one of the following will demand be the most price inelastic? Answer: A 32) For which one of
the following is demand likely to be most inelastic? B 33) Demand will be more inelastic the D 34) Demand will be more elastic the Answer: C 35) Figure 4.1.1 illustrates a linear demand curve.
Comparing the price elasticity in the $2 to $3 price range with the elasticity in the $8 to $9 range, we can conclude A 36) Figure 4.1.2 illustrates a linear demand curve. If the price falls from $13 to $11, Answer: A
37) Figure 4.1.2 illustrates a linear demand curve. If the price falls from $4 to $2, B 38) The quantity of apples demanded decreases
by 8 percent when the price rises by 8 percent. The demand for apples is A 39) A perfectly vertical demand curve indicates that the price elasticity of demand for the good is
A 40) Factors that influence the elasticity of demand include A 41) A given percentage rise in the price of a good is likely to result in a larger percentage decrease in
the quantity of the good demanded b 42) Suppose a fall in the price of a good from $10 to $8 leads to an increase in quantity demanded from 20 to 24 units. The price elasticity of demand is B 43) For which one of the following will demand be the most price elastic? D 44) Suppose this coming winter France will
have unusually bad weather, and that next year's wine crop will be substantially reduced. Select the best statement. E 45) Refer to Table 4.1.2. The table shows two points on the demand curve for volleyballs. What is the price elasticity of demand between these two points? B 46) If the price elasticity of demand is 2, then a 1 percent fall in price C 47) The demand for a good will be more price inelastic, E 48) A union leader who claims that "higher wages increase living standards without causing unemployment" believes that the demand for labour is D 49)
Business people speak about price elasticity of demand without using the actual term. Which one of the following statements reflects elastic demand for a good? C 50) If a rise in price results in a decrease in total revenue, then the price elasticity of demand is Answer: E 51) Suppose that Simon Fraser University decides to raise tuition fees to increase the total revenue it receives from students. This policy works only if the demand for a Simon Fraser University education is B 52) The demand for a good is perfectly elastic when the price elasticity of demand is A 53) When the price elasticity of demand is ________, demand for the good is perfectly inelastic. E 54) When the price elasticity of demand is ________, demand for the good is elastic. B 55) When the price elasticity
of demand is ________, demand for the good is unit elastic. C 56) When the price elasticity of demand is ________, demand for the good is inelastic. D 57) The price elasticity of demand for airplane travel one year in advance of the departure date is most likely to be E 58) The price elasticity of demand for airplane travel one week in advance of the departure date is most likely to be C 59) If a price decrease results in an increase in total revenue, then demand is E 60) Suppose Swiss Chalet in Moncton
knows that the demand for their half-chicken meals is elastic. If the manager wants to increase total revenue from half-chicken meal sales, he should A 61) As a result of a poor growing season,
the supply curve of apples shifted leftward, the equilibrium price of apples rose, and total revenue fell. This suggests that the price elasticity of demand for apples is B 62) Suppose the Nunavut government decides to repair Iqaluit roads. One way to generate sufficient funds for this plan is to increase
taxes on gasoline. The government will be able to raise total revenue from gasoline sales only if the demand for gasoline is D 63) Which of the following will have the most elastic demand? E 64) Suppose your annual income is $65 000 and your favourite TV Guide magazine costs you $28 a year. Your demand for the TV Guide magazine is likely to be Answer: B 65) The longer the time that has elapsed since a price change the more time consumers will have to respond to price changes. As a result, demand becomes C 66) The price of gasoline rises by 25 percent and remains fixed at the new higher
level. Choose the correct statement. C 67) The demand for a good is price elastic if C Topic: Price Elasticity of Demand A 69) If the demand for a good is unit elastic, then a 5 percent increase in price results in C 70) Total revenue from the sale of a good will decrease if B 71) If Saudi Arabia argues that an
increase in the supply of oil will decrease total revenue, then Saudi Arabia believes the demand for oil is D 72) Suppose there is an increase in the cost of resources used in the production of good A. Then C 73) When the price of peanut butter rises by 4 percent, total revenue decreases by 8 percent. The demand for peanut
butter A 74) If price elasticity of demand is zero, then as the price falls B 75) A technological breakthrough lowers the cost of photocopiers. If the demand for photocopiers is price inelastic, we predict that photocopier sales D 76) A decrease in tuition fees will decrease the university's total revenue if the price elasticity of demand for university education is B 77) The demand for orange juice is price elastic. A
severe frost, which destroys large quantities of oranges will B 78) Tina and Brian work for the same recording company. Tina claims they would be better off by raising the price of their CDs, while Brian claims they would be better off by lowering the price. We can conclude that D 79) Given the relationship shown in Figure 4.1.3 between total revenue from the sale of a good and the quantity of the good sold,
then E 80) If the Canucks lower ticket prices and find that total revenue does not change, then the price elasticity of demand for tickets is Answer: C 81) A good has a price elasticity of demand equal to 2. If new imports lower its price from $1.20 to $0.80, the percentage change in quantity demanded will be A 82) Total revenue is more likely to rise when the price rises if Answer: A 83) Total revenue is more likely to rise when the price falls if C 84) If the demand for good Z is perfectly inelastic, then the demand curve for good Z is A 85) Suppose the demand curve for good X is horizontal. This shows that the demand for good X is C 86) If the price elasticity of demand is zero, then demand is C 87) Refer to Table 4.1.3. The price elasticity of demand for Jolt is C 88) Suppose a rise of 8 percent in the price of bison meat in Saskatchewan reduces the consumption of bison meat by 24 percent. Such a price rise will induce
consumers to spend C 89) Refer to Table 4.1.4. The table shows the demand schedule for computer chips. As the price rises from $200 a chip to $300 a chip, total revenue ________. So at a price
of $250 a chip, demand is ________. B 90) Refer to Table 4.1.5. The demand for hotel rooms is ________ because ________. Answer: C 91) When the price of a good increased by 5 percent, the quantity demanded of it decreased 10 percent. The price elasticity of demand is ________. A
price rise will ________ total revenue. A 92) When the price of a good increased by 6 percent, the quantity demanded of it decreased 3 percent. Most likely, this good ________ and ________. A 93) The price elasticity of demand for purses is measured in E 94) The price elasticity of demand depends on Answer: D 95) When the quantity of coal is measured in
kilograms instead of pounds, the demand for coal becomes c 96) The price elasticity of demand for oranges ________ if the quantity is measured in pounds instead of kilograms and ________ if the price is measured in dollars instead of cents. D 1) Consider the information in Table 4.2.1. Select the best statement. A 2) The income elasticity of demand equals the percentage change in ________ other things remaining the same. E 3) If the quantity of carrots demanded increases by a small percentage when income increases by a large amount, we know that the demand for carrots is E 4) If the quantity of carrots demanded increases by a large percentage when income increases by a small amount, we know that the demand for carrots is E 5) Which one of the following must be true if demand is income inelastic? A 6) Which one of the
following must be true if demand is income elastic?
B 7) If a turnip is an inferior good then D 8) If a turnip is a normal good then C 9) Fred's income increases from $1,950 per week to $2,050 per week. As a result, he decides to increase the number of movies he attends each month by 10 percent. Fred's demand for movies is C 10) Fred's income increases from $840 per week to $1,160 per week. As a result, he decides to purchase 24 percent more bubble gum each week. The income elasticity of Fred's demand for bubble gum is E 11) Fred's income increases from $800 per week to
$1,200 per week. As a result, he decides to purchase 40 percent more bubble gum each week. The income elasticity of Fred's demand for bubble gum is C 12) Suppose that a 20 percent increase in income increases the quantity of good A demanded from 19,200 to 20,800 units. The income elasticity of demand for good A is C 13) If a 10 percent increase in income results in a 5 percent increase in quantity demanded, what is the income elasticity of demand? A 14) If a 10 percent increase in income results in a 10 percent decrease in the consumption of widgets, then
B 15) Luxury goods tend to have income elasticities of demand that are A 16) If a 4 percent decrease in income (at a constant price) results in a 2 percent decrease in the consumption of dweedles then B 17) The cross elasticity of demand between any two goods is defined as the A 18) If the cross elasticity of demand between goods A and B is positive,
then D 19) If the cross elasticity of demand between goods A and B is negative, then C 20) If the cross elasticity of demand between beef and bison is 1.5, then a 3 percent increase in the price of beef will lead to A 21) If the quantity of chicken demanded increases by 1.25 percent when the price of beef increases by 2.5 percent, the cross elasticity of demand between chicken and beef is E 22) An economic measure that indicates when the demands for two or more goods are related is D 23) If a rise in the price of good B increases the demand for good A, then a 24) If an increase in the supply of good A increases the demand for good B, then C 25) If an increase in the supply of good A decreases the demand for good B, then D 26) A rise in the price of good A shifts the B 27) If the cross elasticity of demand between peanut butter and jelly is negative, then B 28) Suppose a fall from $110 to $90 in the price of playing golf on a public golf course results in an increase in the quantity of golf balls demanded (at the current price of golf
balls) from 9,950 units to 10,050 units. The cross elasticity of demand of playing golf with respect to the price of golf balls is A 29) A fall in the price of X from $6 to $4 results in an increase in the quantity of Y demanded (at the current price of Y) from 900 to 1,100 units. What is the cross elasticity of demand between X and Y? B 30) If good A is a substitute for good B, then the cross elasticity of demand is C 31) If good A is a complement of good B, then the
cross elasticity of demand is E 32) Refer to Table 4.2.2. The cross elasticity of demand for Jolt with respect to the price of Coke is B 33) Refer to
Table 4.2.2. The income elasticity of demand for Jolt is D 34) Refer to Table 4.2.2. All of the following statements regarding Jolt are true except D 35) The cross elasticity of demand for good A with respect to the price of good B is -1.5. A 10 percent rise in the price of good B will lead to C 36) A good has an income elasticity of +0.5. An increase in income from $15,000 to $25,000 will lead to a E 37) Business people speak about cross elasticity of demand without using the actual term. Which one of the following statements reflects cross elasticity of demand? E 38) Business people speak about income elasticity of demand without using the actual term. Which one of the following statements reflects income elasticity of demand? D 39) A negative value for B 40) If Mr. Brown's income increases by 12 percent and as a result his quantity demanded of music downloads increases by
4 percent, Mr. Brown's income elasticity of demand for music downloads is B 41) When the price of a bicycle falls from $220 to $180 and other things remain the same A 42) When Erika's income increases by 6 percent, her demand for tickets to professional hockey games increases by 3 percent. Erika's demand for tickets is income ________. For Erika, hockey tickets are ________ good. D 43) When the price of a
bicycle falls from $220 to $180 and other things remain the same D 44) Suppose Clyde always eats ice cream and chocolate syrup together. If the price of syrup increases by 10 percent, and the cross elasticity of demand is -2, the quantity of ice cream demanded D 45) If the cross elasticity of demand between two goods is -0.56, then a fall in the price of one good leads to a ________ shift in the ________ curve of the other good. A 46) In the nation of Transporta, the income elasticity of demand for used cars is -2.66. If incomes in this nation increase by 10 percent, C 47) All normal goods have A 1) The
elasticity of supply is a units-free measure of the responsiveness of the C 2) Supply is elastic if A 3) If a large percentage fall in the price of good A
results in a small percentage decrease in the quantity supplied, then D 4) The two supply curves in Figure 4.3.1 are parallel. Between $7 to $8, A 5) If a rise in the price of good A from $9 to $11 results in an increase from 9,500 to 10,500 units supplied, then B 6) If a rise in the
price of good A from $9 to $11 results in an increase in quantity supplied from 4,000 to 6,000 units, the elasticity of supply is D 7) If a 10 percent increase in price results in a 9 percent increase in quantity supplied, D 8) If a 10 percent increase in price results in an 18 percent increase in quantity supplied, the elasticity of supply is D 9) Suppose the price of a television set rises by 10 percent. Which one of the following would we expect to be the most
elastic following such a price change? C 10) A vertical supply curve B 11) A horizontal supply curve C 12) Short-run supply is A 13) Supply is inelastic if B 14) If a rise in the price of good A from $100 to $120 results in an increase in quantity supplied from 10,000 to 12,000 units, then the elasticity of supply is E 15) Long-run supply is D 16) A sudden, end-of-summer heat wave increases the demand for air conditioners and catches suppliers with no reserve inventories. The momentary supply for air conditioners is B 17) When price rises from $1.50 to $2.50, quantity supplied increases from 9,000 to 11,000 units. What is the price elasticity of supply? A 18) Preferences for brussels
sprouts increase. The price of brussels sprouts will not change if the price elasticity of E 19) The elasticity of supply for airplane travel one year in advance of the departure date is most likely to be E 20) The elasticity of supply for airplane travel one day in advance of the departure date is most likely to be C 21) Goods that can be
produced using rare productive resources have a ________ elasticity of supply. The greater the amount of time available after a price change, the ________ is the elasticity of supply. D 22) You are told that a 5 percent increase in the price of a good increases the quantity supplied by 10 percent after one
month. Supply of this good is ________. This good is most likely produced using productive resources that are ________. C 23) In the market for farm crops momentary supply is ________. In the market for farm crops, short-run
supply is ________. A 24) The demand for corn increases. As a result, the price of corn ________, and the less elastic the supply of corn, the ________ will be the
effect on the price. D 25) If the supply curve passes through the origin, then the price elasticity of supply is ________. B Recommended textbook solutions
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When the price of Sketchers increase by 10% the quantity demanded falls by 5% the price elasticity of demand is?So, if the price of a good increases by 10 percent and the quantity demanded decreases by only 5 percent, that good is said to have inelastic demand. The quantity demanded does not stretch much relative to the change in price.
What would an increase in the price of good X do to the demand curve of good y given that both goods are complements?When two goods X and Y are complements, then as the price of the complementary good Y rises, the demand for good X decreases and the demand curve for good X shifts to the left, as in Figure (a).
When a 2 percent increase in price generates a greater than 2 percent decrease in quantity demanded then quizlet?When a 2 percent increase in price generates a greater than 2 percent decrease in quantity demanded, then: total revenue decreases as a result of the price increase.
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